"MARKETS may have hands but not soul", said Dr. Atiur Rahman while addressing a panel discussion on 'Sustainable Finance in Developing Countries' in Dubai organised by UNEP and UAE. It is an important observation that needs to be taken seriously in planning policies on sustainable finance and I would like to share it with my fellow readers. The panel discussion was a part of Global Round Table on Sustainable Finance which was opened by Dr. Thani Al Zeyoudi, UAE Minister of Climate Change and Environment, and attended by about five hundred delegates.
Dr. Rahman mentioned that financial system in developing countries is overwhelmingly bank-based which has to be nudged beyond its short-term lending to serve medium and long-term goals of sustainable development that requires finance to reach the real economy and the base of the pyramid to deliver prosperity for all, poverty for none and respect for mother nature. Financial system or market left to itself can not bridge these gaps alone. Fortunately, Bangladesh has taken a proactive move to reform its financial system to cater to the needs of the real economy, particularly at the lower end. The Bangladesh central bank was able to come out beyond its narrow role and become developmental in its orientation to channel funds to unserved and under-served sectors including agriculture, SME and green enterprises. These socially responsible financing ethos were ingrained in the mindset of the CEOs of Financial Institutions early on. The banks responded positively to the incentives given by the central bank in the forms of refinancing, better rating and awards for their desired performance in innovative finances. The experimentation, implementation and improvement in regulations went hand in hand. In the midst of rapid urbanization and industrialization green finance became an imperative need and Bangladesh's financial sector embraced this financing strategy very quickly. The outcome has been quite gratifying. During last half a decade around 13 million people were benefited from green financing reaching 4.5 million homes with solar panels, apart from other initiatives like bio-gas, effluent treatment plants and organic agriculture. A mixed and context specific approach including refinancing, moral suasion, supervision and awareness building led by the central bank made this possible. Coordination between policy makers, regulators, financial institutions and citizens should further improve to make this campaign of green financing and inclusion a success story of sustainable finance for others to replicate.
AFM Asaduzzaman
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- Friday, 22 November 2024 |
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